Annual rise in cost of public college slows

By Tamar Lewin
Tuition and fees at public universities increased less than 3 percent this academic year, the smallest rise in three decades, according to the annual College Board reports on trends in pricing and aid.

“This does not mean that college is suddenly more affordable, but it does mean that the rapid growth of recent years did not represent a ‘new normal’ for annual price increases,” the report on pricing said.

At the same time, the large increases in grant aid from 2009 to 2011 have slowed and have not kept pace with rising tuition. As a result, the amount students and families actually pay has risen as well.

The average published annual tuition and fees for in-state students at public universities total $8,893, up 2.9 percent from last year. But most of these students pay far less: When grants and deductions of tax credits are taken into account, the net amount students pay is about $3,120.

Only about a third of full-time students pay the full published tuition price with no assistance. And most students from families with income below $30,000 got enough aid to cover their tuition and fees, although they still have costs for room and board, which adds $9,498.

“The news is not as bad as it has been,” said Sandra Baum, a senior fellow at the Urban Institute and lead author of the reports. The new data, she said, should calm fears that college costs are spiraling out of reach: “It does seem that the spiral is moderating. Not turning around, not ending, but moderating.”

For out-of-state students, tuition and fees averaged $22,203, a 3.1 percent increase from last year. And at private four-year institutions, the average published tuition and fees are $30,094, up 3.8 percent from the year before.

College prices have risen faster than the prices of other goods and services in recent years, even as family incomes have declined. And the economic recovery has benefited mostly those in the highest income brackets.

Jane Wellman, a higher-education policy analyst, said the trend reports showed that many public institutions have made serious efforts to rein in their spending — especially community colleges, whose spending has declined sharply over the last decade.

“A lot of them are starting to really restructure their spending, getting to tricky areas like scheduling, distance-based technologies, re-examining their academic offerings and getting students through more quickly,” she said.

About 60 percent of students who earned bachelor’s degrees in 2011-12 graduated with debt, averaging $26,500.

Including graduate students, who tend to borrow more, 40 percent of student-loan borrowers owe less than $10,000, and 30 percent owe $10,000 to $25,000. Only 4 percent owe more than $100,000, according to Federal Reserve Bank of New York data cited in the reports.

With more than a trillion dollars in outstanding student debt, and seven million student loan borrowers in default, many policy experts and legislators seek a basic revision of repayment programs. This week, a policy brief from the Brookings Institution’s Hamilton Project proposed replacing the current array of repayment options with a single income-based system in which borrowers would have a percentage of their earnings withheld from their paycheck, the way their Social Security contributions are.

“We do not have a debt crisis but rather a repayment crisis,” said the brief, by Susan M. Dynarski and Daniel Kreisman of the University of Michigan.

Under their plan, recent college graduates would be able to make small payments, reducing their risk of default.

“The current system turns reasonable levels of debt into crippling payment burdens that can prevent young workers from attaining financial independence and stability,” the brief said.

Currently, according to the College Board reports, about 1.6 million of those with federal loans, or about 11 percent, are in a repayment plan linked to their income. But despite the Obama administration’s efforts to expand and simplify the programs, they remain cumbersome.

Federal loans make up 43 percent of student aid, the reports said, the lowest share in the last decade. On average, undergraduates got 52 percent of their financing in the form of grants, 39 percent as loans, and 9 percent as tax credits or deductions or Federal Work-Study funds.

But the era of rapid growth in grants has ended. After increasing by 30 percent between 2008-09 and 2010-11, grants per student grew by only 1 percent from 2010-11 to 2012-13. And spending on Pell grants, the federal government’s largest program for low-income students, which grew rapidly over the last decade, declined in the last two years.